Primark buoys AB Foods as sugar continues to sour performance

 
Harriet Green
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Shares in Primark owner Associated British Foods are up over six per cent this morning, after the group announced a six per cent rise in pre-tax profit to £434m in the first half of the financial year, and a 26 per cent jump in Primark's profit.

The group called the results “resilient”, despite facing ongoing challenges with its sugar business.

Operating profit rose two per cent to £463m, with basic earnings per share up 12 per cent to 43.2p in the six months ending in March.

It continues to be something of a two story narrative for AB Foods, with strong performances from Primark and its grocery offering counteracting the impact of lower sugar prices and a strengthening pound.

Sales at Primark were up 14 per cent, with revenue at £2.3bn from just under £2bn a year earlier.

This morning, AB Foods announced it’s branching out into the US, opening a number of stores, beginning in Boston next year.

Outlook

The group’s warned that the hit from sugar will, if it carries on, impact overseas results even more in the second half. But “as Primark builds upon the success achieved in the first half and with further store expansion planned for the remainder of the year”, retail’s expected to be “well ahead”.

The firm added: “When combined with improvements in Grocery and Ingredients and a lower interest charge, we continue to expect adjusted earnings per share for the financial year to be similar to 2013.”

The board’s upped the interim dividend by four per cent to 9.70p per share to be paid on 4 July.

In a separate statement, AB Foods said Ruth Cairnie, former executive vice president Strategy & Planning at Royal Dutch Shell, will be joining its board as a non-executive director.